James Knightley, Chief International Economist at ING, notes that UK headline consumer price inflation has jumped from 2.5% to 2.7% in August and is the fastest pace of inflation since February and is a fair bit above the 2.4% market consensus.
Key Quotes
“To highlight the surprise of this report, not a single economist out of 36 surveyed by Bloomberg predicted it would come in this high. The core rate, which excludes food and energy components saw a similar miss. The annual rate rose to 2.1% from 1.9% rather than drop to 1.8% as predicted.”
“If today’s inflation rise is due to currency, the momentum should fade. Instead, we think it is largely noise with inflation set to return to the 2% target early next year.”
“Either way, the economy continues to underperform key partners, and inflation remains broadly in line with the Bank of England’s target.”
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